What is a Personal Umbrella Policy?Primary insurance policies give policyholders access to substantial amounts of protection, but there’s an upper limit to how much coverage most primary policies will afford. Massachusetts residents who want more protection than their primary policies make available may find the additional coverage they’re looking for in a personal umbrella policy.
In most cases, a personal umbrella policy won’t itself provide unlimited protection. These policies, however, come with high limits that generally make it possible to add on a lot of protection to underlying policies’ coverage limits.
Who in Massachusetts Needs Personal Umbrella Insurance?
With the prevalence and potential cost of liability lawsuits seemingly increasing, more and more Massachusetts residents may want to consider getting personal umbrella insurance. Anyone who would like additional liability protection might want an umbrella policy. This includes, but is hardly limited to, the following:
Wealthy individuals who are afraid of being targeted by an opportunistic lawsuit
Families who own property or other assets they don’t want to risk losing
Dog owners who have aggressive dogs that might bite someone
Landlords whose tenants could sue them
Boat owners who could be involved in an on-water accident
People who participate in high-risk activities, like snowmobiling or amateur boxing
How Does Personal Umbrella Insurance Differ from Excess Liability Insurance?Personal umbrella and excess liability are both forms of supplemental liability insurance, but excess liability usually isn’t as broad or expansive as personal umbrella insurance can be.
Whereas personal umbrella policies normally come with their own terms that may make it possible for them to supplement multiple policies and/or fill in coverage gaps, excess liability policies typically adopt the terms of one underlying policy. They usually can’t supplement multiple policies or fill in underlying policies’ coverage gaps.
What Policies Can Serve as Underlying Policies for Personal Umbrella Insurance?The primary insurance policies that personal umbrella policies supplement are sometimes referred to as “underlying policies,” and many different types of personal policies can serve as underlying policies. Homeowners insurance, condo insurance, auto insurance and boat insurance policies are commonly used as underlying policies, but there are many others that can also be used.
(Business insurance policies generally can’t be used as underlying policies for personal umbrella policies, but they often can be used as underlying policies for commercial umbrella insurance policies.)
Why Do Personal Umbrella Policies Have Self-Insured Retentions?Personal umbrella policies frequently come with underlying coverage requirements that must be provided by the underlying policies that they supplement. If these underlying coverage requirements aren’t met by underlying policies, personal umbrella coverage may be compromised.
In situations where personal umbrella policies fill in coverage gaps, however, there typically isn’t an underlying policy that can provide coverage. There’s a coverage gap, after all.
Instead of having underlying coverage requirements in these situations, personal umbrella policies often have self-insured retentions for protections that fill in coverage gaps. Self-insured retentions are normally amounts that have to be paid by the policyholder before the umbrella policy will begin covering a claim. They’re similar in many ways to how deductibles in primary policies function, but a different term is commonly used.